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February 15, 2010
How SAFE Do You Feel?
It was announced today that Senator Evan Bayh (D-Indiana) won't seek re-election to a third term. "Congress is not operating as it should", he said. He went on to characterize America's political system as "broken."

Thank you, Senator Bayh, for finally realizing what the rest of us (you know, the ones that pay for all the folly on Capitol Hill - the taxpayers) already know. How did you manage to get away from the intoxicants (power, money, pork, etc.) of D.C. long enough to come to this conclusion?

This morning I submitted my comments to HUD regarding their proposed guidelines under the SAFE Mortgage Act. HUD's part in all this is laid out below:

"In addition to establishing HUD's responsibilities under the SAFE Act, through this rule, HUD proposes to clarify or interpret certain statutory provisions that pertain to the scope of the SAFE Act licensing requirements, and other requirements that pertain to the implementation, oversight, and enforcement responsibilities of the States. HUD solicits comment on the proposed clarifications and on the regulations proposed to be codified."

So...comments are what they asked for, and comments are what they got. Unfortunately, they limited me to 2,000 characters; otherwise, it's likely I'd still be writing when today turns into tomorrow. Below are my comments, as submitted to HUD:

"The proposal to outlaw owner financing of any residential property the seller doesn't currently occupy is ludicrous. Has anyone done the research to determine how many people (and properties) this regulation would affect?

Scenario #1: A landlord would like to sell his tenants the property they currently rent from him. They had a (prior bankruptcy, foreclosure, medical bankruptcy, fill in the blank) that brought their credit to a level no conventional bank would finance them. They've made their rental payments right on time for two years, and the owner is willing to sell his house to them and carry the financing. He has to become a licensed mortgage originator to do so? Seriously?

Scenario #2: A young couple would like to buy a mobile home that the owner up until recently had been renting. The couple has excellent credit, but simply don't make a lot of money. Regardless of credit, show me the list of national lenders that will lend on a mobile home. Yes, really - I want to see that list, because as far as I know, they don't exist anymore. So with the proposed regulations, how would the seller EVER sell that mobile home if he can't finance it himself?

Scenario #3 - I myself own some land parcels around the country. As a way of getting them sold, I offer financing to prospective buyers. Since TECHINICALLY the land could eventually be someone's permanent residence, and I have never occupied the property, will this law also make it illegal for me to sell (and finance) my properties without becoming a licensed mortgage originator? How much sense does that make?

Is it really the intent of HUD (whose budget comes from taxpayers like me) to restrict commerce and depress the national real estate market even more by making transactions that account for BILLIONS of dollars in sales and involve hundreds of thousands of properties every year ILLEGAL? Shouldn't HUD be trying to create an atmosphere exactly opposite to what these regulations will impose?"

If you're still in a fog about what I'm protesting here, know this: Offering financing on any residence you yourself don't occupy (at the time of sale) will be illegal without obtaining a mortgage lender's license first. Yep, you read that right. If you fall into any of the three scenarios (as a seller) listed above, you will be breaking the law by facilitating a sale through owner financing, and could be fined $25,000 for your kindness.

Ludicrous. Ridiculous. Stupid. I could come up with 1,000 adjectives for these regulations, but these three words sum it up pretty well. Our political system is broken, people. Even the ones responsible for its destruction are beginning to acknowledge it.

Vote 'em out. ALL of 'em. No, I'm not kidding. When Congress reconvenes after the next election, I want moving boxes, not power lunches, to be the topic of conversation. I want to see 435 new Representatives in the House and 36 new Senators. Unfortunately, we'll have to wait a full four years for a complete flush in the Senate toilet to finally remove all the last hangers-on. It CAN be done.

What will it take from us? Selflessness. Stop worrying about the 'clout' your state/district will lose if some 15-term politician loses his/her seat. If that's your thought process, you are part of the problem and not part of the solution.

If you are OK with 'business as usual' from Washington, then ignore this posting and go about doing what you've always done. Oh, by the way, if you own property and/or ever plan to offer financing for it (and I'm guessing you do if you're reading this blog), you may want to start working on your lender's license. You might need it soon.

Make it a great week.

Clint


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